Recently National Public Radio did a drill-down on what has been simmering on the back burners of several government agencies for a while now – how to manage the tech giants.
In the center of the radar screen are Facebook, Alphabet (Google’s parent company), Apple, and Amazon. Usually known as FAANG (Facebook, Apple, Amazon, Google, Netflix). The new acronym for the U.S. House of Representatives-targeted monopoly players is FAAA (Facebook, Apple, Amazon, and Alphabet).
There has been much noise, for a couple of years on the supposed negative impact of these Silicon Valley giants. Recently, the House Judiciary Committee finished up a report that found the members of FAAA are monopolies. The report is 450 pages and the result of a 16-month investigation (which is one of the things politicians do best, generate reports).
Note that this was a House report. I doubt the Senate, its Republicans to be precise, share the same viewpoint because, in fact, none of the Senators have endorsed it. Nevertheless, it is worth taking a deeper dive into the conclusions of the committee.
The report claims FAAA are the dominant players in their respective segments and they control the market. And, while the report finds some antitrust possibilities, I did not find that the report made really strong arguments on the control issue.
OK, but it is not like these tech companies were handed this. The leaders of these companies are shrewd, edge-of-the-envelope, forward-thinking individuals that saw opportunity and seized upon it.
So, now they have gone from darling, a few years ago, to monsters that gobble up everything in their path to achieve dominance.
The report is titled “Investigation of Competition in Digital Markets.” It has been recapped by any number of media outlets but there are some interesting points nestled between the usual legal pontifications.
The first assessment is that they are too big and need to be broken up into separate units – shades of the original AT&T. However, these “monopolies” have a different model. The investigation claims they are controlling the market by stifling competition. I found that much of what the investigations claimed was marginal.
Take Facebook, for example. The rub here is that they absorbed their immediate competition – Instagram and WhatsApp. That certainly puts the kibosh on their major competition. However, it does have a competitor, of sorts, in LinkedIn, although not a major one.
However, truth be told, who cares if Facebook is a monopoly? Nobody is being forced to use it or advertise on it. It does not cost the user and if advertisers want to be visible on it, you either pay the going rate or do not advertise.
This is not like having a monopoly in personal protective equipment where people on Amazon were charging big bucks for masks and it was a critical product or service. It is Facebook, a novelty, even if it is a global app.
There is really no harm in it being the only app of its kind. This is a fair game. If advertisers want to connect with users, then pay the price. Nobody is going to die if a vendor does not connect with users or users do not have another choice other than Facebook.
What about Amazon? It grew to where it is now because it filled a need nobody else offered. There is plenty of competition to it, particularly Walmart.
There might be some question if Amazon is selling its own brand in competition to its members and prevents them from selling the same product. However, I have not seen that. For the most part, Amazon is, technically, a marketplace that offers sales opportunities to anyone who wants it. You do not have to buy an Amazon product – there are plenty of choices.
The same goes for Google, which has the largest search engine. But again, there are a ton of others; Bing, Yahoo, Baidu, Ask, are the major ones but there are also smaller ones such as DuckDuckGo, AOL, Dogpile, and more (who, in their right mind would name anything Dogpile anyway). Perhaps Google could, simply, be forbidden to buy competitive search apps.
But again, who cares if Google has the search engine field sewn up as long as there are others that can be used, and Google does not stop the user from using other choices.
Aside from some of the absurdities the report makes, there are a couple of arguments worth discussing. One is how to even the playing field where there is legitimate concern about monopolies that actually restricts competition. An example of that is by restricting what other companies Facebook can acquire.
For Google, there could be restrictions on their search engine that keep them from interfering with competing ones. For Apple, it could be that they must have open-source code for their apps requiring equal space for competitive apps that are not Apple-certified.
There is also the question of the ramifications of reigning them in – the law of unintended circumstances. For example, if you, say, break up Apple into sub-companies, it can have a negative effect on their ability to maintain ubiquitous service and technical excellence.
Antitrust is a slippery slope in high tech. There are no real precedents for digital monopolies, which makes current laws dated. Although some of the antitrust elements certainly apply, digital economies have different models than those that sell goods, questioning the applicability of existing laws to digital models. So, following these dated “analog-era” laws can have a slew of unintended consequences.
I believe a better approach is to see exactly what verifiable damage is being caused by these mega-corporations before we run off reeling them in because they capitalized on new opportunities and became the dominant players.
Personally, I do not use Facebook or Instagram. WhatsApp is useful if I am out of my mobile carrier’s network (internationally). I use Bing as my search engine and as far as Amazon goes, I use it because it is convenient and, much of the time, I cannot find what I need locally at a decent price. I do not use “Whole Paycheck” simply because the ubiquitous grocery story is too expensive (although Amazon is working on that).
The report notes that Amazon is the “dominant online marketplace” and that evidence “demonstrates that Amazon functions as a gatekeeper for eCommerce.” Well, ok. That results in a standardized interface with a single point of interface to eCommerce. I happen to like that. And is Walmart that much different?
Another conclusion was that Fortune 500 companies, in dealing with the tech giants, feel dependent on their whims. Well, cry me a river and call the waaambulance! I am pretty sure they did not become a top Fortune company by being the nicest guys on the block.
This report may be timely to, shall we say, cap the unrest Washington has been feeling about big tech. However, I do not believe antitrust legislation should be wielded with a sledgehammer, if at all in these cases.
Let us start with some precision microsurgery and see how the patients fare if the government feels it has to do this to make it look like they are actually accomplishing something.
Of course, FAAA players all dispute the findings. While there may be some validity to them, to me, as our illustrious leader likes to say, it looks a bit like a witch hunt.
In essence, their mega-status does not affect me, or most of the people I know. In spite of what the politicians in the House have determined, I still have plenty of choices.